The grim task of formally notifying up to 10,000 workers that they might be laid off began Friday with private meetings between supervisors and employees throughout the California bureaucracy.
For the administration of Gov. Gray Davis, the face-to-face notification of workers being placed on so-called "surplus status" means the clock is ticking on a move to cut $855 million in payroll costs for the fiscal year that starts July 1.

In his revised budget proposal released earlier this week, Davis included no pay raises for workers in 2003-04. The administration is also prepared to achieve the required savings by deferring pay increases, lowering or freezing future salaries and benefits, by layoffs, furloughs and other personnel moves.
"What I'm told by old-timers around here is that we've never faced anything of this magnitude," said Lynelle Jolley, a spokeswoman for the Department of Personnel Administration. "This is unprecedented."

Officials of unions representing state workers see the moves as an attempt by Marty Morgenstern, the state's top personnel officer, to pressure workers into voluntarily accepting pay cuts and other concessions.

But the head of the biggest employee union said he also knows the state's threats are "real" and could result in thousands of layoffs based primarily on seniority.

"Are we going to lay down and say, 'Here, take our money'?" asked Perry Kenny, head of the California State Employees Association.

"I don't think so. That's not how you run a labor union. If you let the least-senior people go in all these departments in this economic climate, all you're going to do is put even more of a burden on the economy."

The "surplus status" notices stem from orders the Democratic governor earlier gave department heads to identify how they would cut 10 percent in payroll costs if labor unions didn't make concessions in the collective bargaining process.

More than 200 such notices went out in an earlier round of announced cuts about the first of the year, but officials said few of those employees lost their jobs. Some retired, and many found openings in other departments.

The unions, which so far have balked at giving up pay increases, argue that state officials need to find other ways to close a budget deficit now projected at $38.2 billion.

Kenny said he prefers a plan that would encourage senior employees to retire with fair severance packages as a way to cut personnel costs by the 10 percent Davis has called for. When the administration offered the so-called "golden handshakes" last year, Kenny said they were so restrictive that only a few hundred people qualified.

But so far, Morgenstern said, proposals to widen the list of employees who could take an early retirement deal would cost the state too much.

"I guess what I'm trying to get across to people, and I think they understand, is that these are not good times," Morgenstern said.

State personnel rules require that before employees can be laid off, they must be put on "surplus status" 120 days before being let go. Once someone has been officially designated for layoff, another 30-day notice is required before actual termination.

Officials said they couldn't be specific about which departments were first on the list to be notified on Friday. Some 140 agencies and appointing authorities were ordered by Davis to identify how they would cut 10 percent of their payroll costs if the same savings weren't realized through collective bargaining.

As those plans are reviewed by state finance and personnel officials, the agencies are being told to start calling in employees and putting them on "surplus status."

"They are verbally telling employees in private, one-on-one conversations," Jolley said. "So far there are between 12 and 15 agencies that have had their plans approved. Once the departments get their OK, the process will really start to speed up."

Most layoffs are based on seniority within job classifications, Jolley said, and for members of all but a few bargaining units it's seniority with state government that counts, not just the agency an employee works for now.

For the unions representing prison correctional officers, California Highway Patrol officers and engineers, seniority counts only for time in jobs covered by those bargaining units.

Doug McConkie, a staff services manager for the Industrial Welfare Commission, said layoffs are just part of the story. He has not received a surplus notice, and with 28 years of state service, he's not too worried about getting laid off.

But under his union's contract, he was to receive a $231-a-month raise in July. That was promised, he said, in exchange for employees agreeing to pay $184 a month the state had been paying into their retirement fund.

But the state is asking employees to forgo the salary increase and keep paying into their retirement funds.

"That's about a 15 percent pay cut," McConkie said. "And that's what's so frustrating. Most state workers are tired of the fact our politicians keep getting us into these binds, and then a disproportionate share of the solution comes off state employees."